Today, David Brooks published an intriguing opinion editorial about the difference between Blue and Red State inequality. Brooks’ definitions of Blue and Red State inequality are necessarily fuzzy. You might be able to evaluate the issue from a quantitative standpoint, for instance; however, that is not the approach Brooks chooses.
Instead, he evokes more of a feeling about what these two distinct types of inequality entail. From someone who has experienced both of these environments, I was extremely impressed by Mr. Brooks’ penetrating insight.
He begins his post with the following contention:
“We live in a polarizing society, so perhaps it’s inevitable that our experience of inequality should be polarized, too.”
He then introduces the two concepts of Blue and Red State inequality. According to Brooks, Blue State inequality is:
“…the kind experienced in New York City, Los Angeles, Boston, San Francisco, Seattle, Dallas, Houston and the District of Columbia. In these places, you see the top 1 percent of earners zooming upward, amassing more income and wealth. The economists Jon Bakija, Adam Cole and Bradley Heim have done the most authoritative research on who these top 1 percenters are.”
In contrast, Red State inequality is:
“This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 percent and the bottom 99 percent. It’s between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.”
Brooks then makes a compelling case for why the media focuses on what he (and I) see as the lesser problem — disproportionate wealth concentration among the top 1%. He argues, and I agree, that the press should be focusing on the greater concern — Red State inequality.
He concludes his piece with the following argument:
“But the fact is that Red Inequality is much more important. The zooming wealth of the top 1 percent is a problem, but it’s not nearly as big a problem as the tens of millions of Americans who have dropped out of high school or college. It’s not nearly as big a problem as the 40 percent of children who are born out-of-wedlock. It’s not nearly as big a problem as the nation’s stagnant human capital, its stagnant social mobility and the disorganized social fabric for the bottom 50 percent.”
Here, here, Mr. Brooks. Here, here.
Reflections of a Rational Republican 
Very good analysis, and I agree. I think if the GOP would agree to modest tax increases on the wealthiest (it doesn’t have to be as high as the Reagan era rates Bachmann suggested!), with the idea that this is not to “redistribute” but to help solve high debt problems that require everyone to sacrifice, then the emphasis on the 1% would be far less salient.
Being rather biased in favor of taxing the more fortunate due to hailing from a lower-class background I wouldn’t necessarily oppose such tax increases on a personal level though I heavily doubt that they would solve anything in the long run. Rather, I’d like to tackle what I feel to be the underlying issues beneath our current lack of prosperity.
Those of you who read my post on the last OWS article can probably already guess what my number one complaint will be about – outsourcing. I genuinely think it is a huge issue plaguing the entire West. Corporations can and do have multiple reasons for shifting their jobs into low-wage countries, of course, and some of them are actually understandable; in many European countries, for example, the economical system actually punishes you for hiring more workers once the government incentives run out because you’d have to spend more money on an employee than he’d actually generate for you. It is only natural that a corporation, being a device to create profit for those that lead it, would try to avoid creating jobs in such a market.
Now, of course, America has a much more forgiving and productive economic environment, at least as far as I, who merely dabbles in such matters as a hobbyist rather than a professional, well, understand it to be. Surely something can be done that benefits all those involved – I’d rather not suggest placing heavy tariffs on companies that do outsource as punitive measures tend to be transferred to the employees rather than doing any actual harm to the actual decision-makers, but since corporate welfare appears to be rather popular around here perhaps we can cut out some of the bureaucracy and directly reward companies with tax cuts for creating jobs for US residents? Keep the money in circulation and the government can tax it just as much, but that way, you’d actually be creating more jobs both directly and indirectly.
Max,
I totally agree. I published my alternative to Obama’s jobs plan here.
It’s not perfect, but it’s a heck of a lot better than Obama’s re-election campaign.
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Talking about inequality as a “Red State” vs “Blue State’ makes inequality seem like a political issue when it’s an economic issue. Whether a person lives in New York of Oklahoma City is less important than whether they can afford to buy health insurance or pay for their kids to go to college. Yes, people with more education tend to have better chances at getting a higher paying job; however, there are millions of underemployed high school and college graduates that can’t get ahead regardless of their education. The unemployed 50 year-old mid-manager with an MBA who’s about to lose his house to bank foreclosure doesn’t give a hoot about red or blue; he only cares about green. Meanwhile CEO of Bank of America (or Chase, or Citi, or Wells Fargo, or any of the other 7 largest banks that control over 70% of all banking assets) is trying to decide whether to use his $10 million bonus to build his 3rd vacation house in the Bahamas or buy a bigger yacht to dock at his 2nd vacation home in Naples. That’s what inequality is all about.
Chuck,
Focusing on 1% of the population ignores the bigger problem — namely that demographic forces are conspiring to create further instability in this country.
Someone without a high school education is virtually unemployable in many areas of this country, because the world has changed and the knowledge economy has taken over. Out of wedlock births also further contribute to social instability (unless the father actually does stick around). Take a look at the statistics. College-educated people are far less likely to be unemployed than high school educated ones. Until we correct that, there will always be more hands to feed and the government will eventually eat itself. This incessant focus and scapegoating on 1% of the population is silly and counterproductive.
The two could be related. If the top 1% have so much of the wealth as a symptom of a deeper problem, then perhaps their excessive wealth and the disparities at within the rest of the population have a similar source. I suspect that when tax rates were dropped so much (while loopholes and legal evasions if anything grew) the ability of the government to maintain infrastructure, support growth and support an educated middle class declined. The theory was that the wealthy would become job creators and invest in the economy to help everyone. If instead that new wealth (thanks to tax cuts) went into bubbles that produced nothing of value for the economy and only short term bubble related jobs, then the economic imbalances undercut and harmed the working and middle classes. Moreover, if those bubbles were products of the wealthiest financial institutions gaming the system with mortgage backed bonds that were not only no good but led them to demand more and more mortgages without regard for their quality, those insiders actually did immense harm to the economy in their desire for short term profit.
To the extent OWS is against Wall Street excesses and the ability of the wealthiest to undermine the US economy (and try to immunize themselves from real market consequences) the problems you note are related to and partially caused by the problems motivating OWS (and to some extent the tea party).
“I suspect that when tax rates were dropped so much (while loopholes and legal evasions if anything grew) the ability of the government to maintain infrastructure, support growth and support an educated middle class declined.”
I disagree here. I think that government has been lavishly overspending for quite some time, and this is a completely separate issue from wealth concentration.
“If instead that new wealth (thanks to tax cuts) went into bubbles that produced nothing of value for the economy and only short term bubble related jobs, then the economic imbalances undercut and harmed the working and middle classes.”
This bubbles likely harmed the wealthy by a bigger percentage basis than the poor and middle class because the incomes of the wealthy are based more on capital gains than salaries. They suffered financially along with everyone else.
Indeed the wealthy are excessively harmed by the recession just as they are “excessively” benefited by a “tax cut”. Of course, such damage is rarely mentioned. The wealthy already pay more than their fair share of taxes, unless “fair” is whatever the government can get. Moreover, millionaires exhibit exactly the kind of good citizenship we ought to welcome (see http://www.thomasjstanley.com/) .
I like the concept that Stanley uncovered that most millionaires have a “go to hell” fund. I am working on one myself, which is why my wife and I share a beat up 2004 Toyota.
Oh yes, the bubbles harmed wealthy and middle class alike. But the thing is that the wealthy had benefited immensely from the bubbles early on, that’s why the bubbles grew. Now, some wealthy simply thought they were making good investments (albeit ones that didn’t support job growth or infrastructure improvement). The few that were truly on the inside — the big financial institutions that OWS is focused upon — were actually rigging the game and setting up damage to all sectors of the economy. And if you’re net worth is 12 million and drops in stock and real estate bring it to $7 million, that’s a huge loss. But you’re still eating well and enjoying a great life style. If you’re income is $30,000 and you get laid off, or have to take a job that pays only $25,000, the change in life style and what you can provide your family is immense.
That’s a fair point. However, the problem cannot be fixed by redistributing the pie. It can only be fixed by growing it.